An organizational structure helps a company ease the decision-making process, specifying things like who reports to whom, who makes final decisions, when to seek hierarchical guidance, and how to speed up initiative-taking. A typical framework for organizational-structure modeling touches on the way a company determines operational needs, hires experienced professionals, evaluates hierarchical-configuration options and ultimately selects a proper organizational chart.

Determine Operating Needs

The first step in modeling a company's hierarchical structure is determining its operational needs. Key considerations to heed include the organization's commercial ambition, how it intends to attract customers, its market-share targets in the next 12 to 18 months, and the importance that top leadership ascribes to the human resources management function. In the corporate context, operational needs affect reporting lines because they impact how much money an organization ponies up to set up and staff a business unit. For example, if senior managers want to increase the company's market share overseas, they may give more hierarchical prominence to foreign operations chiefs.

Hire Competent Personnel

After determining corporate day-to-day needs, human resources managers work diligently to hire competent candidates -- an important activity, especially if the business needs personnel with acumen in areas that draw on arcane concepts, such as scientific positions. If you own a business, pay attention to the recruitment process because people you hire might ultimately determine whether your organizational structure is a success. For example, the company's personnel manager must draw up hiring policies and job descriptions that clearly assign responsibilities, reporting lines and accountability checks. The latter elements enable supervisors to clarify who ultimately is responsible for task performance.

Evaluate Organizational-Structure Options

For corporate leadership, evaluating different organizational-structure options helps figure out the best way to speed up decision-making. By gauging a company's operating needs and hiring capable applicants to fulfill them, department heads can find the best way to establish subordination lines -- meaning, who reports to whom. In the grand scheme of things, these lines may seem unimportant, but they go a long way toward ensuring internal efficiency, productivity and operational effectiveness. Reporting lines, in a sense, give senior leaders peace of mind because they know the business has a sound process in place to execute tasks, remedy issues and soldier on from a competitive standpoint.

Implement Hierarchical Configuration

If you're an entrepreneur, implementing a proper organizational structure is the last -- but not least -- step in sound decision-making. To ease deal-making and operational effectiveness, choose a hierarchical configuration that aligns with your business. For example, pick a simple and direct reporting structure if corporate personnel perform similar tasks on a consistent basis. Otherwise, select a matrix configuration to execute tasks -- this enables employees from various departments to work on a specific project, complete it and help the business make money.

About the Author

Marquis Codjia is a New York-based freelance writer, investor and banker. He has authored articles since 2000, covering topics such as politics, technology and business. A certified public accountant and certified financial manager, Codjia received a Master of Business Administration from Rutgers University, majoring in investment analysis and financial management.